'Era of cheap oil is over'

2006-04-02 18:51

Algiers - Hope of rescuing Africa from poverty may vanish like "snow in sunshine" if high oil prices continue, the 53-nation African Union (AU) said on Sunday.

Alpha Oumar Konare, chairperson of the AU Commission, told an African oil and gas conference the continent's new dreams of development, inspired by a recent rise in aid, greater foreign investment and fewer wars, were at risk from $60 a barrel oil.

"The era of cheap oil is over," he said. "What then becomes of our ambitions and our dreams to see Africa take the path of harmonious development?"

"Isn't there a risk of seeing these hopes melt like snow in sunshine if the burden of the fuel bill is allowed to continue?"

Konare, a former president of Mali who is now the AU's top civil servant, said African countries tended to spend a far greater proportion of their national income on energy imports than rich nations.

"That cannot be without consequence on the rate of growth of these (African) countries," he said.

"The burden of refined product imports is a serious prospect for the future of non oil producing countries," he said, noting that Africa imported 57.6 million tonnes of fuel in 2004.

"At the current price of about $60 a barrel that is about $23bn, a figure which represents more than half of the debt recently cancelled for the 18 most indebted countries."

The AU in January agreed to set up an African Petroleum Fund - a pot of money contributed by African oil exporters - to help African oil importers fund some of the cost of fuel imports, but no details of how the scheme would work have been published.

Konare said setting up the fund was not going to be easy, but the need for some sort of relief was evident.

"Isn't it clear that if nothing is done soon to help African importers cope with this strategic development, they will be able to guarantee neither the supply of oil nor their payment for it, for want of sufficient reserves of foreign exchange," he said.

- Reuters